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Stock Trading in

Three Dimensions

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A Warning

• Yesterday in the comments section I issued a warming to traders essentially saying-that there may be a big shark out there. Many stock market analysts will just look at one dimension and look at the technical aspects of a market, usually the benchmark S&P 500 and make a call. That’s using one dimension.

• Fundamentals are the second dimension. Two weeks ago the Fed and other Central banks essentially told Europe we have your back. There was a huge rally on this news. Yesterday Fed chair Bernanke said he was very worried about Europe but the Fed would NOT bail out Europe. The Fed often works in mysterious ways, but the statement seems opposed to the promised help a couple weeks back.

• John Murphy is the father of inter market analysis – the third dimension. Different markets are strongly correlated. If commodities fall so will stocks. Yesterday oil prices fell 5.05% (One ugly chart) Industrial Metals fell 2.79% (Another ugly chart) Sugar fell 2.61% (Another Ugly chart) compared to the benchmark S&P 500. It fell 1.13%.  A whole lot less.

The cutting edge of the knife is in the inverse relationship (inter market analysis) between Italian bond yields and stocks.

Virtually all investment eyes are focused on Europe.  The breaking point here is  a 7% yield on the 10 year Italian bond. Reaching 7% would be considered unsustainable for the 3rd largest economy in Europe and force a “controlled bankruptcy.”

Therefore the most important technical tool is

10 year Italian bond rate

Using the linked chart above change the setting to the daily rate. You will see a chart that shot up to 6.89% twice and has been beaten back. At 7:40 EST the Italian bond rate stands at 6.69%. A huge fall.

Some financial entity(s) has intervened through a proxy. Was it a Fed (and/or one of their allies) backed bank/entity?  Who knows?

Bottom Line

Trading in 3D is critical, especially for shorter term traders. We are in a danger zone with the Italian bond yield close to 7.00%. There’s a big SHARK out there.

However, for today it looks like the bulls will rally European markets, which will rally our somewhat oversold stocks. At least that’s how stocks look at 7:40 EST.

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

CHECK ALL DATA, I MAKE MORE THAN GRAMMAR  ERRORS.

Zach Wahls

Why has this 19 year old scholar’s 3 minute video been seen by 15,540,308 million people?

Zach Wahls Speaks About Family

The Video

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Occupy Wall Street

Note – Cartoon from outside USA

Some signs OWS’s Message about

Income Inequality is resonating

• Obama now talks the talk.  Many question if he will walk the walk (see yesterday’s Investors411 & comment section)

• NY governor with 65% approval rating, Andrew Cuomo, gets NY legislature to approve additional taxes for the wealthy while cutting them for middle class Americans - Story Link

• It’s way early, but consumer advocate Elizabeth Warren has taken a lead in polling for the MA Senate race over Scott Brown, even though Carl Rove’s group is airing negative adds tying her to OWS.

Compilation from Huffington Post

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STOCKS

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Here’s a list of 130 stories raging from next weeks Fed meetings to the disputed “secret loans”

Strong correlation between Europe and US stock opening price

Photo of Lake in Iran

War In Iran?

Is the US already in an undeclared war in Iran?

• Latest – US drone downed in Iran

• Stuxnet/Conflicker worm computer virus attacks Iran nuclear facilities.

• Assassination (bombing) kills top Iranian nuclear scientists

• Other assassination attempts?

• Plot to kill Saudi ambassador in US linked to Iran

Investors411 has reported in the past that Obama is 10 times more likely to use drones in targeted assassinations than Bush.

This sure looks at least like a cold war. Will it get hot? Betting odds from Intrade on an overt US and/or Israel air strike on Iran by June 2012 = 30%

Payroll Tax Cut

Obama makes case for extending Payroll tax cuts for middle class Americans. Most Republicans oppose this. Romney, of course is flip flopping. Taxes would increase by @ $1000 for most middle class families. LINK to story

Presidential Poll Numbers

Most folks realize Newt Gingrich is up in the polls for Republican Presidential nomination. Voting starts in a month. In the first four voting states Romney is moving in the opposite direction. LINK to story. – Poll compilation.

Newt’s rise has been too meteoric, but this is also a significant sign that Romney may be in trouble.

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STOCKS

The Reality

At the end of the year more conservative fund managers (mutual, hedge 401k managers) have to INVEST their money or explain to INVESTORS why their $$$ are earning next to nothing in a money market account.

For the last four+ months worldwide equities have been in turmoil. These conservative fund mangers hate high risk often measured by the VIX (see chart) As you can see the VIX has basically been above 30 for 4 months and recently dropped below.

The below 3o is kind of an all clear signal, and these conservative investors are sitting on 4 months worth of money.

Therefore – There’s a strong possibility we’ll see Santa Clause.

Of course, some strong fundamental factor can  disable Santa’s sleigh.

Yesterday Standard and Poors (a major rating agency) did put most of Europe on “negative credit watch” for a downgrade. Not enough to stop Santa but  a series of events like this my put the sleigh out of commission.

Strong correlation between Europe and US stock opening price

“The Grand Slam

of Grand Slams”

Dustin Pedroia’s Grand Slam vs Yankees

No this is NOT about Baseball,

but about a financial expert/reporter/editor Dylan Ratigan who was last featured in this blog on September 28. His Rant is the

“Grand Slam of Grand Slams.”

Dylan Ratigan

Wendy Thompson Anderson brings up the August on Air Rant of Ratigan in Investors411 comments section.

Her link to the Ratigan’s Rant.

‘Tens of trillions of dollars are being extracted from our financial system…

Check out Ratigan’s award winning financial background.

If you want to take action you to help

• Join Get Money Out of Politics, I have joined along with 250,00o+ others
• Wendy and her OWS friends deserve consideration.
• You can pass on the Ratigan Rant to others.

Yankee Bob

Yankee Bob’s original editorial has been replaced with the following on Ratigan’s Rant.

Dylan Ratigan’s rant is a grand slam. It’s the Grand Slam of Grand Slams. It is inarguably right on target. Not only is it must see TV but it’s absolutely right on.

I have been saying for months that a 5th grader could solve our economic and social woes. I still believe it. So why is it so hard for our political class to do so? It’s the money!! IT’S  THE MONEY!!!

It’s the money that prevents our politicians from acting  on remedies and even when they do, it’s the money that defeats the initiatives and defeats the individuals pursuing them.

IT”S THE MONEY. Our politicians are bought and paid for. They MUST chase huge amounts of money simply to exist. The  media is literally bought and paid for and manipulates public perception of issues not, for the public good but,thru the narrow prism of corporate interests…

Continued in today’s comments section of blog.

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STOCKS

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The Fed To The Rescue

Last Wednesday the US Fed lead a group of Central Banks with promised funding for trouble Europe. WSJ Story on this. Even China’s Central Bank helped although it said it’s same day action was not coordinated with other Central Banks. They lie. The only noticeable absent institution was the German Central bank.

How the Fed tipped its hand Monday

• Investors411 last Monday brought to light the secret $1.2 trillion in loans to INTERNATIONAL banks over the 2008 meltdown. It’s only natural to infer that they would do the same for International or globalized banks in the EURO meltdown.

• Of course. the globalized banking system is further interconnected through financial WMD’s – Credit Default Swaps.

• Italy & Spain after reaching the 7% yield danger zone [where other European countries entered a “controlled defaults” on a hunk of their bond debt}  rallied on Monday for no apparent reason.

• The single largest entity on the planet able to take action is the Fed and it was rumored to be involved, since no other less powerful entity (Germans, IMF, ECB or bailout fund) had done anything but jaw bone

• The Fed’s role was becoming more apparent. It was only a matter of timing as to when they would PUBLICLY act.  If bond yields remain too high for too long in Italy and Spain their debt structure becomes unsustainable’

Therefore, we had reached critical mass (a meltdown was imminent as bonds crossed the 7% yield levels) It was now or never time for the Cavalry/The Fed.

Banks Get Bailed Out

People get Sold Out

The corrupt crony over leveraged phony capitalist system is getting bailed out again. The people of Europe who have an imposed recession (austerity measures) staring them in the face. Again the blackmail – If we don’t bail out the bondholders/shadow banks then the EURO will collapse and the resulting damage worse.

The threat of financial Armageddon has again forced bailouts. Behind all the bailouts is again the Puppet Master of a corrupt globalized banking system  - Ben Bernanke.

As Yogi Berra would say Déjà vu all Over Again.

Bottom Line Remains - 10s of trillions of dollars of wealth (See Ratigan Rant above) are being transfered under a phony, corrupt, over leveraged, privatize the gains and socialize the losses system. Banksters use catch phrases like “free markets” and capitalism” to hide the massive shift of money.

Given

• When Fed stimulus programs first started US quarterly GDP had fallen to between -4 & -5%

• The benchmark S&P had fallen to 666.

• 7 quarter years later US GDP rose from -5% to over +3%

• The benchmark S&P rose from 666 to 1200.

• Unemployment in same period went from over -700,000 to +200,000 a month.

• Martin Feldstein [Reagan's Chief economist] Fed stimulus is reason stocks go higher and strong performance of US economy

Republicans/Tea Party Take over congress in 2010

• Call for no compromise, focus on cutting government instead of stimulating economy, No tax cuts/stimulus for even small business or extension of payroll tax cut. (Obama Jobs plan) They threaten Bernanke.

• Investors411 warns May 20th that stimulus will run out and downgrades stock outlook. Another downgrade today

• GDP falls from +3.3% to +1.5% (last quarter), jobs from +200,000 to 0 created each month.

• There is almost no sign of inflation in the USA as Treasuries are at their lowest ever.- The arguement used against stimulus

• Richard Koo - warns that every time Japan’s government contracts money supply GDP fell. When government added money/stimulated economy GDP rose.

• 100% no accident that this economy started to turn as the Tea Party started to rise.

Conclusion - It took the most massive government stimulus ever to bring us out of the Great Depression – World War 2.  Republicans are growing in power and that means a contraction in government spending. The Fed is under assault and they want Bernake’s head and any stimulus to stop. (No QE 3 – No tax cuts for small business)

We are being pulled back into the Great Recession by the withdrawal of stimulus. Both the end of Obama’s $787 stimulus winding down and QE 2′s end – Predicted on May 20th by Investors411. The rise of the anti stimulus (even tax cuts for small business) contract the money supply, Republicans is the catalyst behind this downgrade.

It doesn’t matter if Republicans don’t want any form of stimulus to heap blame on Obama/Bernanke for problems or they are true believers of cut government stimulus/spending and GDP will grow.

As long as the constrict the money supply side gains power, stocks and more importantly the economy will suffer.

Danger Will Robinson Danger Danger

Investors411 The Long Term Outlook is changed to CAUTIOUSLY BEARISH

Today’s meltdown, is only the start if there is no additional stimulus and we continue to contract the money supply then even the old 666 on the S&P could be challenged in the next few years.

The Lost In Space Robot (old TV Show) that shouted when danger was around went off with a huge commotion and shouted

Danger Will Robinson Danger Danger.

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Paul’s Corner

Looks like the market thumbed its nose at Operation Twist and sharply sold off after the news.  Just a sell on the news or are we in for more trouble?  Ian Woodward posted a great blog last evening with very detailed analysis of what to watch for in the market action.

LINK

All sorts of talk coming out from the Republican candidates on how to create jobs, suggestions range from eliminating the minimum wage, reducing government regulations, lowering corporate taxes and more. Amazon.com has a distribution warehouse in Allentown Pa. Read about how they have created jobs and the new work place conditions we all can look forward to in the new reality.

LINK

HGSI is having another informative webinar next week Sept 28. You do not have to be a HGSI user to benefit from the free webinar. Here are the details:

Join us on Wednesday, September 28th from 8:00 pm until 9:30 pm for “Prospecting and Trading in a Weekly Timeframe” by Ray F Ebert, PhD.

Ray will share his disciplined weekly trading strategies using HGSI and other software. He will provide technical analysis of prospects submitted by the audience.

Earlier this year Ray was selected to be a “Spiker” on SpikeTrade, a trading community managed by Dr. Alexander Elder and Kerry Lovvorn. In his first quarter as a Spiker Ray won first place for equity and second place for points in the weekly competitions. He also leads the Washington D.C. area HGSI User Group.

Register at: LINK

Looking at individual YSL 5 stock action yesterday after the Operation Twist announcement caution is suggested. If you dare to play please use real stops and don’t keep lowering your stop if your stock sells off.  ZAGG is getting toasted at the moment and needs some time to settle down and correct.

Detailed YSL 5 analysis this weekend, maybe. Watch the comments section.

Remember, you are responsible for your investment decisions, and I am not. Please do your diligence, and please take ownership for your actions because I‘m sure not going to.

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I am exiting all long stock positions – Today’s meltdown may rebound, but the long term outlook remains bleak for stocks as long as the folks who want to contract money supply, are gaining power. (I’ll wait on GLD till it hits its stop/sell)

What would change this outlook is more stimulus from our Fed to Europe & USA. A realization that constricting money supply hurts stocks and the economy/GDP growth by a greater segment of the population. Unexpected GDP growth  Europe, emerging markets, USA.

HFT’s are obviously powerful enough to manipulate stocks up and down within a range.

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Long Term Outlook

(for US stocks only – not our economy)

CAUTIOUSLY BEARISH

*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day(s)

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

Greece

The Greek debt crisis has impacted the world. Just what are the austerity measures imposed by European Banks on Greece. Here’s the top 5  from CNBC. (CNBC is an ultra pro bank/Wall Street network.) More details at link.

NB all prices are in EUROs not dollars

• Raise Taxes – 7 trillion over next 3/4 years. Includes a 23% value added tax.
• Wage cuts – 15% public sector (huge 25% of Greece is public sector workers.)
• Military Cuts – about .5 trillion
• Social Security costs – about  5 trillion – means test and retirement age moves from 61 to 65.
• Luxury Tax – All they said was thy were going to soak the rich too.

Lets compare this with what the US is doing to balance it budget.  Obviously both parties are to blame and they are far more interested in ideology than solutions. However, one sides total lack of willingness to compromise was pointed out in Obama’s press conference.

Republican’s are not willing even to compromise on

“limiting tax deductions for corporate jets.”

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KISS & Stocks

(Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Technicals, Fundamentals & Analysis

Shorter Term Outlook.

• Chart of the Day – Shows HFT trading over 15 major exchanges (not dark pools)  - “The image below reflects high frequency trading (HFT) operations with quotes in milliseconds. The sharp increases in the chart are what’s termed “quote stuffing” as the machines try to engineer some action over the four minute span.”

Thanks to Dave Fry. The quote and chart are his

• At the end of he quarter managers of stock funds “window dress” their stocks. Part of this rally is “window dressing” or stock managers buying the “hot” stocks to impress their clients so that they stay invested. The major factor is the HFT are buying. Both the quarter and QE2 end today.

• The McClellan Oscillator (MO) chart rose to +52.72 (above +30 somewhat overbought , above +60 overbought, above +90 OMG overbought) Repeat -The MO has been unable to get above the +50 range for 6 months. It sure looks like the +50 high of the last 6 months is about to fall = long term bullish. Short term almost overbought = Bearish

• $USD The Dollar fell  again significantly -0.55% yesterday. (+/- 0.50 is a significant move and the dollar is usually a contrarian indicator) The trend since May 1 is bullish for dollar and bearish for stocks. Big reversal down in last 3 days. Most of this movement is based on Greece. Short term tend for stocks now = Bullish/Neutral

• Reading The Tea Leaves - Shorter term – Repeat-  A raging bull is stampeding and right now it looks like the only barrier is that markets are almost oversold and what earnings season might have next month.  MO is at +53 almost oversold

Long Term

• Fed tells Wall Street and Banks - it has your back. The Fed with its surprise announcement favoring banks (swipe fees)  over consumers has sent a message to the markets that it will do whatever it takes takes. MC & Visa up 10+% and banks rallied on $8.5 billion BAC settlement. This $ went to big hedge funds etc. not to middle class.

• It certainly looks like the HFT’s can sustain a low volume rally without Fed liquidity (QE2 which ends today). Earnings season, Chinese inflation, or something else may trump this, but for now bulls have regained momentum and the only barrier is overbought markets.

• Obviously, people who buy/sell stocks think the Greek crisis is bullish.

• Reading Tea Leaves - Changing back to NEUTRAL for the summer.

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Your Stock List

Here’s the LINK to a spreadsheet of YSL #4.

YSL #4 beat the benchmark S&P 500. So did YSL 1 & 2 & 3

Remember t0 send in by emails or post in the comment section any choices YOU have for YSL # 5

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Current Positions

Below – Investors411  hypothetical portfolio that should outperform the S&P 500.

NLY - Annaly Capital Mgt. Ultra high dividend stock

Short term strategy is to short overbought stocks. –  Stocks did not rally from their earlier highs so I did NOT “nibble on” the TZA trade. Will do so if the Dow goes up 60+ points and I’m watching.

NB – The long term strategy is no longer to short rallies since outlook has turned to NEUTRAL

Disclosure - I own NLY &  a group of dividend stocks which I have used some short ETF’s to protect. – I buy all stocks mentioned in the hypothetical Investors411 portfolio.

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Look for an enlightened Paul’s Corner every Tuesday & Thursday and the always informative comments section every day.

Paul is on break for a couple weeks.

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The Fed has moved from an expanding money supply to a neutral – No QE #3. Congress is threatening to contract the money supply. “We [the USA] need to grow at this point more than anything else.” Investors411 outlook will remain negative/neutral on the USA unless the Fed and/or congress return to more pro growth policies and/or Euro defaults are resolved.

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Longer Term Outlook

NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

Nobel Laureate Michael Spence has a workable solution for the Jobs crisis.

His book – The Next Convergence

The great illusion in the USA is somehow the private sector will bail us out. Baloney!

American Companies are doing GREAT. They are flush with $1.68 trillion in profits from last quarter. But as you all know (see past Investors411) they take that money and invest it overseas. Spence work looks into just that the loss of jobs here from 1980 to 2008. The money quote from Time Magazine

“The companies that did business in global markets, including manufacturers, banks, exporters, energy firms and financial services, contributed almost nothing to overall American job growth. The firms that did contribute were those operating mostly in the U.S. market, immune to global competition — health care companies, government agencies, retailers and hotels. Sadly, jobs in these sectors are lower paid and lower skilled than those that were outsourced.”

Spence offers a concrete formula for what the USA has to do to create jobs.

Solving The Job Problem

Germany in 2000 was faced with a huge economic problem of incorporating the much economically weaker East Germany with the far more weaalthy West Germany.

Government, labor leaders and CEO’s sat down together. Government offered companies temporary tax breaks if they would NOT outsource. Company leaders worked with educators to find the right skills they needed.

It worked!

( last page of the Time Magazine article referenced above has  more)

The solution is simple and obvious, yet the political polarization and the lobbyists in the USA keep tearing us apart.

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KISS & Stocks

(Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Technicals, Fundamentals & Analysis

• Congratulations to both Paul & The Critic for taking profits at the close on Friday – Nobody ever went broke taking profits. (see comments section of blog) A good short term move.

• The McClellan Oscillator (MO) chart fell  to -67.93. US Stocks are oversold. (anything below -60 = oversold) Just like last week,  another “snapback” oversold rally is possible today. This is the most US stocks have been oversold since mid March

• How the week sets up from Jeff Miller in Seeking Alpha – A more bullish view.

• A debate on IMAX (An Investors411 favorite that is under pressure now) from Seeking Alpha - Bulls and Bears

• Reading The Tea Leaves – Repeat from Friday – “this looks like what they call a dead cat bounce.“ Obviously this happened Friday.

• Reading The Tea Leaves - Longer Term - Repeat from last week –  ”See May 20th blog for forecast for this summer.” Fundamentals in the end will trump technical analysis and fear/greed. But right now we are running on fear and that’s bearish.

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Fed Conspiracy Theories

There is no end to conspiracy theories since our financial system is run in the shadows. It a globalized world out there. Our Fed Bank will have purchased $600 billion by June 30th from the following “Primary” (that’s their term) Dealers.

Obviously the world’s globalized banking system is interconnected. The international banking cartel rules the world (If you define controlling the flow of money as ruling) Our Fed is the Big Kahuna in this system. But you may find it interesting that 12 of the 20 Primary Dealers are Foreign Banks. Foreign Banks are bolded and all 20 Primary Dealers listed below.

• NP Paribas Securities Corp.
• Barclays Capital Inc.
• Cantor Fitzgerald & Co.
• Citigroup Global Markets Inc.
• Credit Suisse Securities (USA) LLC
• Daiwa Capital Markets America Inc.
• Deutsche Bank Securities Inc.
• Goldman, Sachs & Co.
• HSBC Securities (USA) Inc.
• Jefferies & Company, Inc.
• J.P. Morgan Securities LLC
• MF Global Inc.
• Merrill Lynch, Pierce, Fenner & Smith Incorporated
• Mizuho Securities USA Inc.
• Morgan Stanley & Co. LLC
• Nomura Securities International, Inc.
• RBC Capital Markets, LLC
• RBS Securities Inc.
• SG Americas Securities, LLC
• UBS Securities LLC.

You know how oceanographers tag a shark to see where it goes. I’d love to be able to tag the printed $ coming out of our US Treasury and see where it goes.

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Positions

Below – Investors411  hypothetical portfolio that should outperform the S&P 500.

SLV/AGQ (later is very roughly 2x silver and another possibility)  SLV Sold 1/2 for +3% profit. Last part was stopped out at just above what it was bought for. Total Profit +2%

NLY - Annaly Capital Mgt. Ultra high dividend stock. (I realize most of you do not know how to do this or perhaps understand the following, but like The Critic I have bought insurance on NLY - a July put at $18. This cost me  a bit less than 2% of NLY’s value)

Caution - “Owners of NLY should look at it chart. A 3 year history show that almost every time this stock and others like it get over extended there is a sharp one day high volume significant fall. Two major declines in the last six months and we are long overdue for the pattern to repeat itself. For prospective buyers after the dip is the time to buy.”

As predicted NLY has had a big drop(for NLY a @2% drop os two days is big)  I expect this drop will continue at least for today and perhaps break though its 50 day moving average.  Investors411 looks at NLY & AGNC as potential Buy the dip stocks because of big dividends. History (chart pattern shows that NLY can easily fall below its 50 day moving average, and that’s a potential buy point.

TZA - (3 times short small cap stocks) Bought 1/2 position in TZA (3x short small cap stocks) at 38.65 on Tuesday   Added another 1/2 position to TZA at 39.75 at/near open Wednesday.  Bought another 1/2 TZA position at 39.75 Thursday.

Investors411 has recommended using TZA or SDS as a hedge/insurance against losses in NLY or other dividend stocks (see past month blogs on dividend stocks.)  stocks) Although stocks may rally today the fundamentals behind the call are still solid and if you are using these short ETF’s I’d keep them in play.

Will add another full or 1/2 TZA positions on any modest market rally.

Repeat from last week - Therefore Strategy remains

• Short any rally - Investors411 will use TZA (3X short small cap stocks) and SDS (2x short S&P 500 more conservative) .
• Sell long positions into any rally -

Taking Profits –  Nobody goes broke taking profits. If you ate net short the market take the profits (I like anything above 5%) and short the next rally.

Disclosure - I own NLY, & TZA - I buy all stocks mentioned in the hypothetical Investors411 portfolio.

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The Fed has moved from an expanding money supply to a neutral – No QE #3. Congress is threatening to contract the money supply. “We [the USA] need to grow at this point more than anything else.” Investors411 outlook will remain negative on the USA unless the Fed and/or congress return to more pro growth policies.

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Longer Term Outlook

Neutral/CAUTIOUSLY BEARISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

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Global Roundup

• UK - Slowest recovery in 180 years (Financial Times headline) The right wing in the USA desperately wants us to take the same measures the UK has.

• Syria – The dictator continues to massacre pro democracy advocates – 41 yesterday. Latest

• Yemen - Civil war intensifies, Part of Arab spring/democracy movement Latest

• Best source for Arab Spring Revolutions. LINK

• US – Effective Corporate Tax rate Lowest for US as a % of GDP among 30 industrialized nations in survey NYT LINK Wall Street’s propaganda machine cries about taxes, but the reality is they are among the lowest in the world.

• World News – Global Commission – “Global war on Drugs has Failed.” BBC LINK This is not really news, just a statement of the obvious. We should  legalize/tax marijuana sales.

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KISS & Stocks

(Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Technicals, Fundamentals & Analysis

Reading The Tea Leaves

Bottom Line - All this will gets played out this summer.

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Shorter Term Forecasting Indexes

There are hundreds of forecasting tools, – These two tools have worked

When they stop working Investors411 will use other Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] Dollar rose yesterday +0.33%. This halted a A five day decline. We’re at an inflection point and today’s move will give a clearer picture of momentum.  Still trading below 50 DMA .  For US Stocks = NEUTRAL/bearish
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] From Yesterday “Very reasonable to assume rally will soon become overbought.”  Obviously stocks were overbought and this added to yesterday’s meltdown. MO fell dramatically to -1.72 yesterday. This is almost the exact middle of the range so stocks are not oversold or overbought. Lots of wiggle room up or down, but after a real bad meltdown momentum is with the bears. However overall position is now = NEUTRAL

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Paul’s Corner

ARRRRRGGGGHHHHHH!!!!!

Wow what a sell off yesterday! Was this an honest reaction to a dismal employment report (A private corporation report) Greece or just en excuse for profit taking? It looks like a small bounce at the open, which is usually expected after a big drop.

Looking at the market we find the Treasuries, Gold, Silver and the  Commodities at the top of the list yesterday  above the  indexes, DOW, S&P, Naz 100, etc. As Dave Garlardi reminded us last evening on the HGSI Webinar when we find these indexes at the top you don’t want to be in the market. Is this merely a buy the dip opportunity?

A good search on a down day is for the high demand stocks, 4 of the top 5 were “medical/pharma” groups. 2^nd on the list was the “Internet services” group.

Internet-Services (7.00%, 7 securities)

• Cogent Communications Group (CCOI)
• IAC/InterActiveCorp (IACI)
• NetEase.com  Inc. (NTES)
• Rediff.com India  Ltd. (REDF)
• Sify Technologies Limited (SIFY)
• SINA Corporation (SINA)
• VirnetX Holding Corp (VHC)

It looks like VHC carried the group (in fact it was the top high demand stock yesterday), here is why:

LINK

All of the stocks on Your Stock List went down as expected. Most hit support. JNPR down almost 10% from “Cautious Outlook” remarks from the CEO. Since JNPR has been in a constant downward slide for 3 months now I doubt this is a buy the dip opportunity.

The usual warnings of capital preservation come out after days like yesterday, this sounds like a good idea IMO.

So what’s the market going to do today? Let’s load up Quote Tracker………here we go folks another day of fun! (fun?)

Remember, you are responsible for your investment decisions, and I am not.  Please do your diligence, and please take ownership for your actions.

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Positions

SLV/AGQ (very roughly 2x silver) This is a high beta commodity, full of speculators and therefore will fall far faster than stocks –

Mea culpa – Should have taken profits on 1/2 yesterday. Will do so today – hopefully in a rally.

REMX – (Rare Earth metals) Investors has a 1/2 position in this ETF

NLY - Annaly Capital Management – An ultra high dividend stock.

YOUR Stock List – These are growth stocks that have higher risk.

Strategy - Until we get a sign from the Fed that they “have our back” buying the dip is out and selling into rallies is in. (unless you can find a superior stock – see Paul’ and other bloggers in comment section of blog.)

Investors411 will be adding ETF’s that short the market in rallies. See comments section of blog for when this happens. See POSITION’s section of blog for some alternatives.

The sky is NOT falling. But the bullish fundamentals that have kept the bull market growing since November are changing. This brings uncertainty/fear and investors sell under these conditions.

Disclosure - I own both SLV & REMX

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Check out the advice, recommendations, analysis by bloggers on stocks,politics and trends in the comments section of the blog Many of the best concepts regarding YOUR Financial Future are discussed their. Watch for Paul’s Corner every Tuesday and Thursday

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Longer Term Outlook

NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Jane Mayer/Investigative Journalist

The Secret Sharer

Editorial by Yankee Bob

In a SciFi novel you may run into a Facist Police State . In this Police state for the sake of Homeland Security, some people,citizens or outsiders may be branded as dangerous or even threats to the Security of the State and therefore, Enemies of the State. That threat that could brand citizens as enemies of the state will be decided not in a court of law with all the tenents of due process that the citizens are costitutionally entitled to.

Nope. Faceless bureacrats,agents of the government or corporate hires acting on behest of a private contractor , will make that judgement call. That call that can brand a citizen as an enemy of the state and no longer deserving of or given their rights to due process.

Now ,what kind of threats can land a citizen in such a pickle? Well,it could be some corporate hire merely finding something that they deem as ” SUSPICIOUS.” Remember,a private contractor can’t say to it’s Boss, We haven’t found anything. They have to come up with stuff no matter how shaky it may be because they have to prove that they are worth the expense. They need to justify their existence or their contract dries up. They will use powerful computers,in private ,that have the ability to monitor all communications,foreign and domestic, and cell phones,faxes, and email.

Merely going on line to certain sites could be enough to cast suspicion on you. Bank records,credit activity,taxes,birth records,travel,spending,…everything can be tracked and recorded without a warrant or court order. This can only happen in a police state you say. We have Constitutional safeguards you say. YOU ARE WRONG. THESE PROGRAMS ARE ALREADY IN PLACE AND FUNCTIONING IN THE UNITED STATES! You are being trcked and recorded!

THIS,…IS BEING ARCHIVED!

We have been warned. We were warned in bits and pieces over the years but the big picture is in place. The telecom carriers have cooperated in the program and sought and were given immunity from prosecution for breaching the rights of Americans. All communication goes thru this program. It records and archives it all ,leaving the door open for future investigation. All on the quiet and all in secret. Whether you trust Obama with this power is irrelevent. Maybe he gets replaced by a Rick Santorum or Michele Bachman type.  Maybe Dick Cheny or his daughter Liz.

How can you be free if every move and every communication is being recorded and can be used against you. You are subject to investigation merely on whim and suspiccion ,without due process. You can lose all of your rights ,at the whim of a corporation or a politician and none of it follows due process. Your rights,your freedoms sre yours but only at the perogative of unseen hands and forces. It is a brave new world! It’s a good thing none of our politicians or corporations would ever abuse this power.

Oh ,Please!! Please , Read the link!

LINK

to New Yorker Piece by Jane Mayer

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KISS & Stocks

(Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

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CHANGE

IN LONG TERM OUTLOOK

After over 8 month of almost always CAUTIOUSLY BULLISH,

Investors411 is downgrading the long term outlook to NEUTRAL.

This is largely because of the uncertainty created by the Fed’s ending of QE2 (quantitative easing) on June 30th.

Stock market investors and professionals hate uncertainty. That’s what we will have after June 30th. Last year between the end of QE #1 in March and QE #2 our benchmark S&P fell (scroll down to weekly chart) at its worse @-17%. (1220 to 1011 – see chart) Every pro and serious trader is aware of this fact and may be front run the end of QE #2.

The Fed still has YOUR (stock Investors) back with low interest rates, but the lack of additional capital injections after June 30th changes the equation.  At some point down the road if the economy/stocks toasts the Fed will be forced into some form of adding liquidity. But that’s down the road.

The economic outlook worldwide is grim. Europe’s debt crisis,US debt crisis, Japan’s GDP fall/crisis, China’s corruption/inflation The bright sport remains emerging markets. When you add the democracy revolutions in the Arab world (obviously a move in the the right direction) that uncertainty grows. The economic situation NOW has more uncertainty than last year.

Technically, the traditional growth areas tech and small cap stocks are under performing.  Investors are moving into safer stocks. Dividend stocks are one of those areas.

Bottom Line -I think there is a better than 60% chance we’ll see a summer meltdown like last year. The training wheels are coming off the bike and I don’t think our economy or the world’s economy is ready to ride yet.  I hope I’m wrong.

The Fed will probably ride to the rescue with more liquidity if things go bad, but we are now entering THE UNCERTAINTY PERIOD.

Remember stocks did rise for a short period directly after QE1 ended. So this change is NOT a panic move, but a longer term move to NEUTRAL  based on uncertainty.

Holding non defensive stocks, especially high beta stocks may be a problem.

YSL #4 will under perform – sell into rallies

Investors411 may use ETF’s that short the market

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Shorter Term Forecasting Indexes

There are hundreds of forecasting tools, – These two tools have worked

When they stop working Investors411 will use other Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] Dollar fell  -0.44% yesterday. Stocks rallied as the dollar fell and rose when the dollar stopped falling yesterday.  For stocks shorter term trend = Bearish/Neutral
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO rose to -1.79. Squarely in the middle of = Neutral

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A List of high dividend Utility Stocks

Caution - Neither Paul or I have had a chance to go over the price charts yet.

Criteria – The three year dividend growth rate is greater than zero. Latest dividend after ticker symbol.

• EXC – 5.03 %
• ETR – 4.80%
• DPL – 4.41
• AVA – 4.36%
• DTE – 4.53%
• AGL – 4.41%
• CMS – 4.13
• D – 4.09

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Check out the advice, recommendations, analysis by bloggers on stocks,politics and trends in the comments section of the blog  Many of the best concepts regarding YOUR Financial Future are discussed their. Watch for Paul’s Corner every Tuesday and Thursday

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Longer Term Outlook

NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Relax – Investors411 is taking a break

Will be back on 4/25 Some links and comments below

• No change in general market outlook – Still bubblicious and CAUTIOUSLY BULLISH If we close below last weeks low outlook changes to NEUTRAL
• Short term bearish tend, still in place as of closing on Friday even though we’ve had three days of slight gains.
• For the top 3 investments for the 2nd quarter LINK HERE (scroll down)
• For YOUR Stock List - LINK HERE (scroll down)
• For information on all suggested portfolios LINK HERE (scroll down)
• For why we are Investors in Wonderland LINK HERE (scroll down)
• For a message to my fellow cows LINK HERE (scroll down)
• Our proven indicator of an oversold or overbought market has been the McClellan Oscillator (+/- 60 a rough guide)

Be sure to check out the comments section for Paul’s enlightened comments on the markets.

Reading The Tea Leaves

June 30th is the date that the Fed’s quantitative easing is “supposed” to end. The zero% interest rates and QE has forced anyone seeking higher returns into stocks or junk bonds.

Markets will have a growing supply of $ till then and even if it does completely shut down that supply of money will still be in the economy. So as both the stimulus (Obama compromise) winds down and “supposedly” QE 2 ends we loose the money supply that has driven stocks higher.

Two major questions arise.

• Will frightened investors front run June 30th and yank their money out? - This would be shown by a big  INCREASE in volume on down days for the stock market – This has not happened yet.
• Once QE 2 ends, who will buy our treasury bonds? We’ve already seen Pimco (largest private US bond company) get out of treasuries. I agree with the group that thinks that if a storm comes after June 30th the Fed will be forced into some other kind QE.

On another matter

Friday night Goldman Sach’s Jan Hatzius again dropped GDP outlook for USA from 3.5% at start of year to 2.5% a few weeks ago and 1.75% Friday night. Aside – yes GS is a Vampire Squid (link is yet another example) but most of the time someone from GS or their protegee has run treasury and many key financial  post in the White House for over a decade. They have the inside info. While this downgrade hurts the USA economically, emerging market growth is far more critical to globalized US stocks.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING